Much was expected from the Rediff.com this quarter – as the leading online media site in India, and with around 75% of its India Online revenues dependent on the Advertising – we logged on to Rediff’s earnings call for inputs on spread of the Advertising drought:
— India Online Revenues: $4.04 million (72%) from Advertising , $1.58 million (28%) from Fee based services.
— Advertising revenue split: Financial Services – 15%, Jobs – 15% and Travel – 10%, account for a total of 40%
— 70% of revenue is from display based ads (CPM), and 25% from performance based ads.
— Registered user base of 72 million. Unique userbase grew by 8.4% (Comscore)
— 261 companies advertised with Rediff in Q2, up from 257 in Q1.
Online Advertising Scenario
— India Online advertising, which accounted for around 72 percent of revenues this quarter, was down from 75% last quarter, though “on a blended basis, the average yield and average price have not changed.”
— “There’s been no substantial change as compared to Yahoo or Google. We believe they’ve had a similar experience in the market.”
— Financial Services used to spend with Rediff for acquiring Credit Card and Housing Loans, and had contracted the most, but are improving – they’re looking to advertise to get people to deposit money again. Travel portals have cut back sharply, because commissions for them have been slashed. Job sites, which accounted for 15%, are down as well, because of their dependence in IT services for recruitment.
Display Ads over the next 3-6 months?
We don’t give any guidance. But only 3-4 sectors have been affected over the last 45 days. It depends on how quickly they regroup. The airline companies need customers to grow – I think they’ll get back, it’s just a question of when.
Display getting preference over pay-for-performance?
It’s an over-arching trend throughout the world – there’s a move towards more and more performance based advertising. There’s search driven by e-commerce sites, and there is the general pay-per-click on non-search, which the Online companies do. At the same time, the offline advertising crowd that accounts for 60 percent of our revenues do not normally do ppc. For example, Hindustan Lever can’t do much with clicks, because they have a brand site. I think display will be 50-60% for quite some time.
Impact of (Web18’s) In.com?
“We’ve had zero impact of In.com. Comscore shows Moneycontrol is declining. Moneywiz has roughly twice the user base of Moneycontrol, according to Comscore.” – Ajit Balakrishnan, CEO of Rediff.com
Ajit Balakrishnan used the word “re-prioritising”, but “delaying” works as well – Rediff plans to cut expenses to achieve an OPEX (Operational Expenditure) decline of 8-15 in the current quarter, by delaying the development of certain projects for which they had external contracts for developing some parts of their infrastructure. Projects have been placed on the back-burner by 6 months to a year.
Focus on Fee based/Premium services?
With advertising drying up, we asked Balakrishnan if Rediff plans to focus more of Fee based users, or add premium services to their financial portal MoneyWiz. His response:
Fee based services are essentially utility services, which people don’t have a discretion to cut. “As a media entity, Advertising will continue to remain important. The mix of customers is changing. MoneyWiz is the industry leader, above Yahoo Finance and Moneycontrol. However, the advertising revenue from MoneyWiz is relatively meager – and it’s ironic that by the time it became successful, the finance sector began declining. But we’ll pursue it. It’s a big part of our growth. We keep thinking about paid services, but apart from WSJ, no one has really succeeded. I must point out that Rupert Murdoch had forecast that the dependence on advertising would decline, and more and more people would charge subscription. They’ve had a great success with the WSJ.”
Ishare – Content Deals
Rediff had signed a number of content deals with media companies for their video sharing platform iShare. We asked Balakrishnan about whether they intend to renew these deals, given the downturn in advertising, and that some are up for renewal.
“No, I’m not aware of any deals that are going to expire soon, certainly not in this quarter. The reason we’re doing deals and sometimes paying money for the content is that the DMCA is not applicable in India, and users can upload copyrighted content. So we need the goodwill of the copyright owner. The world hasn’t figured out a way to get advertising on the video platform that is commensurate with its reach, but we’re almost as big as YouTube in India. One lesson we’ve learned in the online world is that where there are users, the money follows.
Applications – Why the delay?
“There has been a qualification process. We’ve found that younger developers in India are taking longer to qualify themselves, test the code etc. The international developers are finding it a challenge to work this far from us. Recall that Facebook and MySpace are all in their own backyard – most of the applcation developers are in the Bay Area. It’s taking longer than we thought because of distance issues. This is definitely a path that we’re embarking on. We’re starting to push very hard; it’s a priority item and I review it twice a week. We didn’t create our own app because we didn’t want to go into competition with our own developers. We’re testing 2-3 apps for the News applications – it’s an important category for us. ”
Plans for a social networking space?
The platform is being tested, on iShare. Invitation patterns are already in sight. There are two ways of doing social networking – one is pureplay, where people meet other people – which worldover people are getting fatigued with that. The other is build around content, wherein you’ve got a chance to bookmarked what you’ve read. I believe that’s the way it will go. Our effort is to build it into content, and let people do more things with content. That’s what happened with message boards, but there are more sophisticated ways to do it.